Discount retailer Poundland has been sold to South African retailer Steinhoff International in a £597 million deal.

Poundland accepted the 222 pence per share bid after rejecting a cash offer from Steinhoff last month for an undisclosed sum.

The deal includes a 2 pence per share final dividend on top of a 220 pence per share bid and represents a premium of around 40 per cent on Poundland's average share price in mid-June.

Steinhoff - which owns UK furniture firm Harveys and Bensons For Beds - recently lost out to Sainsbury's to buy Argos owner Home Retail Group was also recently outbid for London-listed white goods retailer, Darty.

Poundland recently reported a near 84 per cent fall in annual statutory profits to £5.9 million as it counted the cost of its lengthy takeover battle of 99p Stores and tougher trading in a crowded discounter market.

Steinhoff had built up a 23.6 per cent stake in Poundland in recent weeks.

Poundland chairman Darren Shapland said the deal gives investors an “opportunity to realise their shareholding at a certain and attractive price”.

Shapland said the deal achieved the target value for the share price under the groups turnaround plan earlier than could be expected and “against a background of increasing economic uncertainty in the UK and a more challenging trading environment”.

Steinhoff chief executive Markus Jooste said: “The board of Steinhoff and its management team are enthusiastic about the opportunities that this transaction brings: we believe that there is significant merit in bringing Poundland into Steinhoff's global network.

“Steinhoff is developing a fast-growing, price-led retail business across the UK and the rest of Europe. Poundland would be a complementary fit to this growth story.”

He added that management at Poundland would continue to play a "key role" after the takeover and said he looked forward to “welcoming” the chain's employees.